Energy

Barclays Slashes Many Top Oil & Gas Players' Bullish Expectations

Jon C. Ogg

Published: July 6, 2017 1:45 pm

Last Updated: January 12, 2020 10:24 am

On a day in which a draw in crude is bolstering oil prices, one key research downgrade is keeping a lid on some of the gains that might have otherwise been seen in oil and gas stocks. Barclays had already become much more negative about certain U.S. oil prices, but now the firm has cut its target prices on many key oil and gas companies.

Michael Cohen of Barclays earlier on Thursday discussed a weaker outlook for oil on a CNBC appearance. After a closer look into the firm’s actual equity research call, the real barb here is just how much the targets have been cut at many of the key North American energy players. It was a cut on close to 20 oil and gas stocks in all, and many of the stocks were already rated as Underweight at Barclays.

24/7 Wall St. used some recent research from Barclays within the past 60 days to show just how drastic some of the target cuts are in the key oil and gas stocks. Trading history and consensus analyst price targets from Thomson Reuters have been added for reference as to how the stock prices look now. This is on a day when West Texas Intermediate crude was up $1.05 (2.3%) at $46.18 per barrel.

Chesapeake Energy Corp. (NYSE: CHK) saw Barclays cut its price target to $2 from $4. Even back on May 5, 2017, Thomas Driscoll and his team of analysts at Barclays already had an Underweight rating and a $4 target, and the stock was trading at $5.13 at that time. The firm noted even then that it is on track for its 2017 plans, but it saw Chesapeake as poorly positioned against peers at that time. Barclays even saw a cash deficit of about $1.3 billion for 2017 while growing proforma production by just about 2%.

Chesapeake was last seen on Thursday trading flat at $4.78. Its 52-week trading range is $4.17 to $8.20, and its consensus analyst target price is $6.34.

Anadarko Petroleum Corp. (NYSE: APC) had its price target price cut to $32 from $42. Barclays had cut the rating on Anadarko to Underweight from Equal Weight back on June 14. That call was based on low multiples expected from Gulf of Mexico assets, expectations for lower MLP/GP asset valuations and a modest view of Anadarko’s onshore assets.

Anadarko was recently trading down 1% at $44.38. Its consensus target price is $72.98, and its 52-week range is $43.45 to $73.33.

Apache Corp. (NYSE: APA) saw its target price cut to $30 from $38 on Thursday, and even on June 20 the firm reiterated an Underweight rating and cut the Apache price target to $38 from $41. Barclays has assumed the Egypt and North Sea assets will act as a drag on the growth and that its stock will disappoint.

Apache shares were last trading down 1.3% at $47.01. The stock’s 52-week range is $45.15 to $69.00, and its consensus target price is $56.72.

Cabot Oil & Gas Corp. (NYSE: COG) was down hard on Thursday after Barclays cut its price target to $25 from $27, even if that is now a tad above the current price. Back in May, Barclays had an Overweight rating, and the $27 target from Barclays was above the $23.24 share price at that time. Sadly, it was also in May that Barclays said Cabot was the firm’s favorite gas stock along with higher production guidance.

Cabot traded down 3.1% at $24.12. It has a consensus target price of $28.85, and the 52-week trading range is $20.02 to $26.74.

Continental Resources Inc. (NYSE: CLR) had Barclays slash its target price to $34 from $54. That actually now is more in line with the current share price. On May 4, that $54 target compared with the close at about $40 a share at the time. The Barclays team then noted that Continental Resources deserved a premium multiple based on its cost efficient growth.

Continental Resources was last seen up 0.3% at $31.39. Its 52-week range is $30.18 to $60.30, and it has a consensus analyst target of $52.04.

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Devon Energy Corp. (NYSE: DVN) saw a harsh target price cut at Barclays, from $45 down to $31. The firm lowered the price target to $45 from $47 back in May, when it had an Overweight rating. That was after Devon had delivered much higher U.S. oil volumes than expected with strong Eagle Ford and Delaware Basin numbers.

Devon Energy’s shares traded down 1% at $30.80. Its consensus target price is $48.70, and its 52-week range is $29.89 to $50.69.

Whiting Petroleum Corp. (NYSE: WLL) saw its price target cut to $7 from $10 by Barclays in the call. While that is far less than the near-double the firm’s prior target implied, it still indicates close to 30% upside to the new target.

Whiting Petroleum is a top crude oil producer in North Dakota, and it also operates substantial assets in northern Colorado. The stock was last seen trading up about 0.2% at $5.35. Its consensus target price is $11.28, and the 52-week range is $5.11 to $13.39.

Encana Corp. (NYSE: ECA) saw its target price reduced to $8 from $12 in the Barclays call, giving implied downside of close to 8%. It was just on June 20 that Barclays maintained its Overweight rating for Encana after a Permian Basin field tour in which Encana announced an increase to its Permian premium inventory and type curves but reiterated 2017 guidance. Instead of 40% upside, now Barclays sees downside.

Encana was last seen trading up 0.7% at $8.64 a share. It has a consensus price target of $13.54 and a 52-week range of $7.34 to $13.85.

Other key price target cuts by Barclays were shown below.

Energen Corp. (NYSE: EGN) saw Barclays cut its target price to $54 from $63. Shares were recently trading up 0.6% at $48.20. The consensus target price is $66.19, and the 52-week range is $43.70 to $64.44.

Extraction Oil & Gas Inc. (NYSE: XOG) saw its target price cut to $19 from $24. The stock was last seen down 1.4% at $12.98. It has a 52-week range of $12.47 to $25.08.

Gulfport Energy Corp. (NASDAQ: GPOR) saw Barclays lower its price target to $19 from $24, which still signals upside from the current price. Gulfport Energy was trading relatively flat at $14.51. Its consensus target price is $23.44, and it has a 52-week range of $12.47 to $32.50.

Halcon Resources Corp. (NYSE: HK) had its price target lowered to $5 from $8, which is still above its current share price. It was last trading up 0.8% at $4.47, in a 52-week range of $3.69 to $16.90. The consensus target price is $10.00.

Parsley Energy Inc. (NYSE: PE) saw Barclays cut its price target to $32 from $38 on Thursday, still about 16% higher than the prior day’s closing price of $27.61. The stock was recently trading down 0.7% at $27.42 a share. Its consensus target price is $41.68, and its 52-week range is $25.17 to $39.82.

PDC Energy Inc. (NASDAQ: PDCE) saw its Barclays price target slashed to $59 from a prior $80, but that is still almost 40% upside from the current price. Shares were last seen p 0.7% at $42.78. The 52-week range is $40.12 to $84.88, and the consensus target price is $70.58.

RSP Permian Inc. (NYSE: RSPP) saw its target price cut to $38 from $46 by Barclays, which is still about 18% higher than its current price. RSP Permian, which is still projected by many analysts to be a big winner from lower-cost production, was trading up 0.3% at $32.17. Its consensus target price is $50.14, and its 52-week range is $29.67 to $46.92.

W&T Offshore Inc. (NYSE: WTI) is a much smaller company, with its $265 million market cap, but Barclays cut its target price to $1.50 from $2.00 in that call. If the firm is right, then W&T’s catchy WTI ticker may still have over 20% more downside ahead. Shares were last trading flat at $1.93. The 52-week range is $1.31 to $3.47, and the consensus target price is $2.00.